We hope this collection of wisdom serves as a valuable guide as you navigate an ever-changing market environment and build long-term wealth.
During extreme periods for the market, investors often make decisions that can undermine their ability to build long-term wealth.
When faced with such periods, it can be very valuable to look back in history and study closely the timeless principles that have guided the investment decisions of some of history’s greatest investors through both good and bad markets. By studying these great investors, we can learn many important lessons about the mindset required to build long-term wealth. With this goal in mind, the following pages offer the wisdom of many of history’s most successful investment minds, including, but not limited to; Warren Buffett, Chairman of Berkshire Hathaway and one of the most successful investors in history; Benjamin Graham, recognized as the “Father of Value Investing” and one of the most influential figures in the investment industry; Peter Lynch, portfolio manager and author. Though each of these great investors offers perspective on a distinct topic, the common theme is that a disciplined, patient, unemotional investment approach is required to reach your long-term financial goals. We hope this collection of wisdom serves as a valuable guide as you navigate an ever changing market environment and build long-term wealth
Avoid Self-Destructive Investor Behavior
Chasing the hot-performing investment category or making major tweaks to your long-term investment plan can sabotage your ability to build wealth. Instead, work closely with your financial advisor to outline your long-term goals, develop a plan to achieve them and set the expectation that you will stick with that plan when faced with difficult periods for the market.
Understand That Crises Are Inevitable
Crises are painful and difficult, but they are also an inevitable part of any long-term investor’s journey. Investors who bear this in mind may be less likely to react emotionally, more likely to stay the course, and be better positioned to benefit from the long-term growth potential of stocks.
Historically, Periods of Low Returns for Stocks Have Been Followed by Periods of Higher Returns
Low prices can increase future returns. Investors who bear this in mind are more likely to endure hard times and be there to benefit from the subsequent periods of recovery.
Don’t Attempt to Time the Market
Investors who understand that timing the market is a loser’s game will be less prone to reacting to short-term extremes in the market and more likely to adhere to their long-term investment plan.
Don’t Let Emotions Guide Your Investment Decisions
Great investors throughout history have recognized the value of making decisions that may not feel good at the time but that may potentially bear fruit over the long term–such as investing in areas of the market that investors are avoiding and avoiding areas of the market that investors are embracing.
Understand That Short-Term Underperformance Is Inevitable
Almost all great investment managers go through periods of underperformance. Build this expectation into your hiring decisions and also remember it when contemplating a manager change.
Disregard Short-Term Forecasts and Predictions
Don’t make decisions based on variables that are impossible to predict or control over the short term. Instead, focus your energy toward creating a diversified portfolio, developing a proper time horizon and setting realistic return expectations.